Georgia Natural Gas Company 817 West Peachtree St. NW Atlanta, Georgia 30308

                                                                                                                             

 

Georgia Natural Gas Company, a Georgia corporation (“GNGC”) and Piedmont Energy Company, a North Carolina corporation (“Piedmont”).

 

Pursuant to that Second Amended and Restated Limited Liability Company Agreement of SouthStar Energy Services LLC (“SouthStar”) dated as of September 1, 2013 (the “LLC Agreement”), GNGC has elected under Section 12.5(a)(2) to purchase from Piedmont its 15%
interest in SouthStar (the “Transaction”).
In accordance with Section 12.5(c) of the LLC Agreement, Closing of the Transaction is expressly subject to consummation of Piedmont’s Change in Control.
Capitalized terms used herein but not otherwise defined herein shall have the meaning(s) ascribed to them in the LLC Agreement.

 

GNGC will pay Piedmont $160 million dollars in cash as the Market Value for Piedmont’s Company Interest at the closing of the Transaction (the “Closing”).
The Parties acknowledge that they have resolved their initial disagreement regarding the Market Value of Piedmont’s Company Interest to be transferred pursuant to the Transaction, and that it will not be necessary for either Party to initiate the Dispute
Resolution Procedures provided in Article XVI of the LLC Agreement with respect to the Transaction.

 

Concurrently with receiving $160 million dollars in cash for its Company Interest at Closing, SouthStar will distribute to Piedmont its share of unpaid and/or accrued Company Income and any other amounts due and owing to Piedmont through the date of
Closing as indicated in the financial statements prepared by SouthStar in connection with the Closing (see line item 6 below). No other amounts shall be paid or distributed to Piedmont at Closing.

 

Except as directly addressed by this Term Sheet and any subsequent agreement memorializing its terms, the LLC Agreement shall continue to govern the relationship of the Parties in SouthStar, including, without limitation, Section 9.4 “Capital Accounts,
Allocations, and Distributions Attributable to Transferred Interest”, Section 12.5 (c) “Changes in Control”, and Section 12.7 “Transition Costs.”

 

SouthStar shall prepare and deliver to Piedmont and GNGC unaudited preliminary financial Statements for the period from January 1, 2016 through the most recent calendar month end preceding the Closing to assist with the proper implementation of the
relevant portions of the LLC Agreement (and as described in this Term Sheet) to the Transaction, including the Distribution of Company Income described above.
The Parties agree that SouthStar shall cause the final 2016 stub period (January 1 through the Closing date) financial statements to be audited as soon as reasonably practicable after Closing and to reconcile, and if necessary “true up,” the distribution
of Company Income to Piedmont.

 

Piedmont agrees, and at Closing will cause its parent company to agree that neither they nor any of their affiliates will solicit for employment any of those individuals employed by SouthStar as listed on Exhibit A to this Term Sheet (the “Covered SSE
Employees”) for a period of thirty (30) months following Closing date, provided that, this shall not prevent Piedmont or its affiliates from (i) employing any SouthStar employee whose employment was terminated by SouthStar prior to commencement of
employment discussions between Piedmont and such employee, and (ii) placing any public advertisements or conducting any other form of general solicitation for employment that is not targeted at any of the Covered SSE Employees.

 

At Closing, Piedmont shall irrevocably and completely release and abandon its option to Purchase C&I Customer retail business as defined in Section 7.4 of the LLC Agreement and Piedmont shall not exercise its option under Section 7.4 prior to Closing.

 

At Closing, Piedmont will agree and will cause its parent company to agree that neither they nor any of their affiliates will compete with SouthStar for Target Customers in the Retail Territory for a period of thirty (30) months following the Closing date.
With respect to the Transaction and the Closing, “Target Customer(s)” shall have the same meaning as that set forth in Article I of the LLC Agreement; and the definition of “Retail Territory” in Article I of the LLC Agreement shall be revised to mean (i)
the entire States of Georgia and Illinois, and (ii) in the State of Ohio, such part(s) of Ohio wherein, as of the Closing date, reside Target Customers of Vectren Energy, Dominion East Ohio, and Columbia Gas – Ohio.
Notwithstanding the foregoing, and as provided in Section 7.1(b) of the LLC Agreement, the Transaction and Closing shall not preclude Piedmont or any of its present or future affiliates from engaging in the purchase, transportation, supply, sale,
marketing, storage and/or infrastructure development of liquefied natural gas, compressed natural gas and/or natural gas vehicle facilities and/or filling stations. Provided further, and notwithstanding Section 7.1(d) of the LLC Agreement, Piedmont and
its present and future affiliates shall not be precluded from acquiring a Person or entity that has as an ancillary (but not primary) part of its business operations engaged in the purchase, transportation and sale of natural gas on a non-regulated basis
for Target Customers located in the Retail Territory.

 

The parties will agree on the language of any press release or other public communication about this Agreement or the Closing of this Transaction.
The Parties acknowledge that each of their parent companies may file a Current Report on Form 8-K and/or make other necessary disclosures to the SEC regarding this Transaction and that such filings and/or disclosures require no prior approval from the
other Party.

 

Piedmont agrees to cooperate with GNGC and SouthStar in obtaining all regulatory approvals or consents necessary to consummate the Transaction, including without limitation approval by the Georgia Public Service Commission.

 

As required by the LLC Agreement, the Parties will memorialize the Transaction, including:

(i) any agreed upon matters expressly set forth in this Term Sheet, (ii) Piedmont providing GNGC at Closing a representation and warranty as to good and clear title to the interest being transferred, and (iii) a mutual release by each Party in favor of the
other, substantially in the form of the Conveyance and Assignment Agreement attached to the LLC Agreement as Exhibit H.

 

Governing law shall be Delaware.